Working capital $3,091,000 – $860,000 Current ratio $3,091,000 ÷ $860,000 Quick ratio $1,866,000 ÷ $860,000 Accounts receivable turnover $8,260,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2] ÷ ($8,260,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory [($1,072,000 + $1,100,000) ÷ 2] ÷ ($4,100,000 ÷ 365) Ratio of fixed assets to long-term liabilities $2,690,000 ÷ $1,690,000 Ratio of liabilities to stockholders' equity $2,550,000 ÷ $4,055,000 Times interest earned ($976,800 + $127,000) ÷ $127,000 Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 20Y6 Assets Current assets: Cash $823,000 Marketable securities fill in the blank 5e07a6079007fd0_1 329,000 Accounts receivable (net) fill in the blank 5e07a6079007fd0_2 714,000 Inventory fill in the blank 5e07a6079007fd0_3 1,072,000 Prepaid expenses fill in the blank 5e07a6079007fd0_4 157,000 Total current assets $fill in the blank 5e07a6079007fd0_5 3,095,000 Long-term investments fill in the blank 5e07a6079007fd0_6 824,000 Property, plant, and equipment (net) fill in the blank 5e07a6079007fd0_7 2,690,000 Total assets $fill in the blank 5e07a6079007fd0_8 6,609,000 Liabilities Current liabilities $fill in the blank 5e07a6079007fd0_9 Long-term liabilities fill in the blank 5e07a6079007fd0_10 Total liabilities $fill in the blank 5e07a6079007fd0_11 Stockholders' Equity Preferred stock, $10 par $fill in the blank 5e07a6079007fd0_12 Common stock, $5 par fill in the blank 5e07a6079007fd0_13 Retained earnings fill in the blank 5e07a6079007fd0_14 Total stockholders' equity $fill in the blank 5e07a6079007fd0_15 Total liabilities and stockholders' equity $fill in the blank 5e07a6079007fd0_16 Profitability Measures Match each computation to one of the profitability measures in the table. Profitability Measures Computations Asset turnover $8,260,000 ÷ [($5,781,000 + $5,591,000) ÷ 2] Return on total assets ($791,340 + $127,000) ÷ [($6,605,000 + $6,415,000) ÷ 2] Return on stockholders' equity $791,340 ÷ [($4,055,000 + $3,852,250) ÷ 2] Return on common stockholders' equity ($791,340 – $65,000) ÷ [($3,567,500 + $3,424,800) ÷ 2] Earnings per share on common stock ($791,340 – $65,000) ÷ 250,000 shares Price-earnings ratio $35 ÷ $3.05 Dividends per share $175,000 ÷ 250,000 shares Dividend yield $0.70 ÷ $35 Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If < 5, round down and if ≥ 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%. Comparative Income Statement For the Years Ended December 31, 20Y6 and 20Y5 Increase/(Decrease) 20Y6 20Y5 Amount Percentage Sales $fill in the blank 80054809ef81fec_1 8,260,000 $7,267,000 $fill in the blank 80054809ef81fec_2 fill in the blank 80054809ef81fec_3 % Cost of goods sold fill in the blank 80054809ef81fec_4 4,100,000 (3,444,000) fill in the blank 80054809ef81fec_5 fill in the blank 80054809ef81fec_6 % Gross profit $fill in the blank 80054809ef81fec_7 4,160,000 $3,823,000 $fill in the blank 80054809ef81fec_8 fill in the blank 80054809ef81fec_9 % Selling expenses $fill in the blank 80054809ef81fec_10 $(1,453,200) $fill in the blank 80054809ef81fec_11 fill in the blank 80054809ef81fec_12 % Administrative expenses (1,239,000) (1,103,000) fill in the blank 80054809ef81fec_13 fill in the blank 80054809ef81fec_14 % Total operating expenses $fill in the blank 80054809ef81fec_15 $(2,556,200) $fill in the blank 80054809ef81fec_16 fill in the blank 80054809ef81fec_17 % Operating income $fill in the blank 80054809ef81fec_18 $1,266,800 $fill in the blank 80054809ef81fec_19 fill in the blank 80054809ef81fec_20 % Other expense (interest) fill in the blank 80054809ef81fec_21 (120,600) fill in the blank 80054809ef81fec_22 fill in the blank 80054809ef81fec_23 % Income before income tax expense $fill in the blank 80054809ef81fec_24 $1,146,200 $fill in the blank 80054809ef81fec_25 fill in the blank 80054809ef81fec_26 % Income tax expense fill in the blank 80054809ef81fec_27 (179,460) fill in the blank 80054809ef81fec_28 fill in the blank 80054809ef81fec_29 % Net income $fill in the blank 80054809ef81fec_30 $966,740 $fill in the blank 80054809ef81fec_31 fill in the blank 80054809ef81fec_32 % Final Questions
$3,091,000 – $860,000
$3,091,000 ÷ $860,000
Quick ratio
$1,866,000 ÷ $860,000
$8,260,000 ÷ [($714,000 + $740,000) ÷ 2]
Number of days' sales in receivables
[($714,000 + $740,000) ÷ 2] ÷ ($8,260,000 ÷ 365)
Inventory turnover
$4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2]
Number of days' sales in inventory
[($1,072,000 + $1,100,000) ÷ 2] ÷ ($4,100,000 ÷ 365)
Ratio of fixed assets to long-term liabilities
$2,690,000 ÷ $1,690,000
Ratio of liabilities to
$2,550,000 ÷ $4,055,000
Times interest earned
($976,800 + $127,000) ÷ $127,000
Balance Sheet
Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts.
Balance Sheet
December 31, 20Y6
Assets
Current assets:
Cash $823,000
Marketable securities fill in the blank 5e07a6079007fd0_1
329,000
Accounts receivable (net) fill in the blank 5e07a6079007fd0_2
714,000
Inventory fill in the blank 5e07a6079007fd0_3
1,072,000
Prepaid expenses fill in the blank 5e07a6079007fd0_4
157,000
Total current assets $fill in the blank 5e07a6079007fd0_5
3,095,000
Long-term investments fill in the blank 5e07a6079007fd0_6
824,000
Property, plant, and equipment (net) fill in the blank 5e07a6079007fd0_7
2,690,000
Total assets $fill in the blank 5e07a6079007fd0_8
6,609,000
Liabilities
Current liabilities $fill in the blank 5e07a6079007fd0_9
Long-term liabilities fill in the blank 5e07a6079007fd0_10
Total liabilities $fill in the blank 5e07a6079007fd0_11
Stockholders' Equity
Common stock, $5 par fill in the blank 5e07a6079007fd0_13
Retained earnings fill in the blank 5e07a6079007fd0_14
Total stockholders' equity $fill in the blank 5e07a6079007fd0_15
Total liabilities and stockholders' equity $fill in the blank 5e07a6079007fd0_16
Profitability Measures
Match each computation to one of the profitability measures in the table.
Profitability Measures Computations
Asset turnover
$8,260,000 ÷ [($5,781,000 + $5,591,000) ÷ 2]
Return on total assets
($791,340 + $127,000) ÷ [($6,605,000 + $6,415,000) ÷ 2]
Return on stockholders' equity
$791,340 ÷ [($4,055,000 + $3,852,250) ÷ 2]
Return on common stockholders' equity
($791,340 – $65,000) ÷ [($3,567,500 + $3,424,800) ÷ 2]
Earnings per share on common stock
($791,340 – $65,000) ÷ 250,000 shares
Price-earnings ratio
$35 ÷ $3.05
Dividends per share
$175,000 ÷ 250,000 shares
Dividend yield
$0.70 ÷ $35
Comparative Income Statement
Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If < 5, round down and if ≥ 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%.
Comparative Income Statement
For the Years Ended December 31, 20Y6 and 20Y5
Increase/(Decrease)
20Y6 20Y5 Amount Percentage
Sales $fill in the blank 80054809ef81fec_1
8,260,000
$7,267,000 $fill in the blank 80054809ef81fec_2
fill in the blank 80054809ef81fec_3
%
Cost of goods sold fill in the blank 80054809ef81fec_4
4,100,000
(3,444,000) fill in the blank 80054809ef81fec_5
fill in the blank 80054809ef81fec_6
%
Gross profit $fill in the blank 80054809ef81fec_7
4,160,000
$3,823,000 $fill in the blank 80054809ef81fec_8
fill in the blank 80054809ef81fec_9
%
Selling expenses $fill in the blank 80054809ef81fec_10
$(1,453,200) $fill in the blank 80054809ef81fec_11
fill in the blank 80054809ef81fec_12
%
Administrative expenses (1,239,000) (1,103,000) fill in the blank 80054809ef81fec_13
fill in the blank 80054809ef81fec_14
%
Total operating expenses $fill in the blank 80054809ef81fec_15
$(2,556,200) $fill in the blank 80054809ef81fec_16
fill in the blank 80054809ef81fec_17
%
Operating income $fill in the blank 80054809ef81fec_18
$1,266,800 $fill in the blank 80054809ef81fec_19
fill in the blank 80054809ef81fec_20
%
Other expense (interest) fill in the blank 80054809ef81fec_21
(120,600) fill in the blank 80054809ef81fec_22
fill in the blank 80054809ef81fec_23
%
Income before income tax expense $fill in the blank 80054809ef81fec_24
$1,146,200 $fill in the blank 80054809ef81fec_25
fill in the blank 80054809ef81fec_26
%
Income tax expense fill in the blank 80054809ef81fec_27
(179,460) fill in the blank 80054809ef81fec_28
fill in the blank 80054809ef81fec_29
%
Net income $fill in the blank 80054809ef81fec_30
$966,740 $fill in the blank 80054809ef81fec_31
fill in the blank 80054809ef81fec_32
%
Final Questions
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